Sign up for our daily briefing

Make your busy days simpler with the Axios AM and PM newsletters. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on the day's biggest business stories

Subscribe to the Axios Closer newsletter for insights into the day’s business news and trends and why they matter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sign up for Axios Pro Rata

Dive into the world of dealmakers across VC, PE and M&A with Axios Pro Rata. Delivered daily to your inbox by Dan Primack and Kia Kokalitcheva.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with the Axios Sports newsletter. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with the Axios Des Moines newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with the Axios Tampa Bay newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Nashville news?

Get a daily digest of the most important stories affecting your hometown with the Axios Nashville newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Columbus news?

Get a daily digest of the most important stories affecting your hometown with the Axios Columbus newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Dallas news?

Get a daily digest of the most important stories affecting your hometown with the Axios Dallas newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Austin news?

Get a daily digest of the most important stories affecting your hometown with the Axios Austin newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Atlanta news?

Get a daily digest of the most important stories affecting your hometown with the Axios Atlanta newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Philadelphia news?

Get a daily digest of the most important stories affecting your hometown with the Axios Philadelphia newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Chicago news?

Get a daily digest of the most important stories affecting your hometown with the Axios Chicago newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sign up for Axios NW Arkansas

Stay up-to-date on the most important and interesting stories affecting NW Arkansas, authored by local reporters

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top DC news?

Get a daily digest of the most important stories affecting your hometown with the Axios DC newsletter.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

The GOP is betting its control of Congress on the passage of tax cuts, but in interviews with economists, we found little confidence that either the House or Senate proposals would boost GDP growth and wages, the stated aims.

Expand chart
Data: Inflation data from BEA retrieved via Federal Reserve Bank of St. Louis, Productivity data from BLS retrieved from "No Recovery: An Analysis of Long-Term U.S. Productivity Decline"; Chart: Andrew Witherspoon / Axios

The bottom line: There's a broad consensus among economists that the central problem facing the U.S. economy today is low productivity growth. It explains both slow-growing wages and the exploding costs of housing, health care, and education. Tax cuts such as the GOP recommends might give the economy a short term boost, says Jonathan Rothwell, senior economist at Gallup. But productivity, he tells Axios, will remain flat "without sweeping policy reform."

The details: Productivity matters because it measures the amount of stuff or services workers make or provide per hour. The faster productivity grows, the easier it is for these workers to justify higher wages, or for companies to lower prices. According to Rothwell, productivity has grown just 0.6% per year since 2007, or less than a third of the rate between 1948 and 1973.

  • This translates into slower wage growth. Douglas Holtz-Eakin, president of the American Action Forum, a conservative think tank, says that while recent Census data shows household income rising, this only reflects people moving from unemployment to employment or from part-time to full-time work. It doesn't mean they obtained an actual wage increase.
  • "In households where people worked full time for [all of 2016], their real increase in income that year was zero," said Holtz-Eakin, a former director of the Congressional Budget Office.
  • Three industries are primarily responsible for slow productivity growth: education, housing and health care. Together, they accounted for 36% of total national spending in 2015, up from 25% in 1980.

The dispute is about taxes and productivity. Rothwell says that the GOP's claimed link between tax policy and productivity is tenuous. "The idea that lowering taxes boosts economic growth is a well-established theory, and I don't dispute it," Rothwell tells Axios. "But the economy grew much faster throughout much of the mid-20th century with more inefficient and onerous tax policies, so the slowdown [in productivity growth] cannot be attributed to bad tax policy"

  • But Holtz-Eakin finds a stronger case for lowering taxes: A major driver of productivity growth is corporate investment in new technologies, he says. And the purchase of such productivity-enhancing equipment would be made cheaper under GOP plans for a lower corporate tax rate and other changes in tax law.
  • But economist Josh Bivens says in research published earlier this year that consumer demand is too sluggish to justify more robust investment in productivity-boosting equipment.

Rothwell and Holtz-Eakin say that state and local tax policy can go far, separate from what Washington does. They say:

  • Slow productivity growth in healthcare can be in part blamed on laws that protect doctors from competing with less credentialed practitioners, like nurses or dental hygienists, and laws that protect hospitals from competition.
  • In the housing sector, productivity growth is being stunted by zoning laws and other cost-increasing state and local regulations.
  • And in education, it's being held back by a steep expansion in the number of administrators.

Another obstacle is the market power of today's big companies. Amazon, Facebook and Google are so large and face so little competition that they stifle productivity growth, economists say. Bank of England Chief Economist Andrew Haldane describes this as the rise of "natural monopolies in which single or small sets of players dominate market share."

The bottom line: No one knows with certainty why productivity growth has been slow since the 1970s. And Robert Gordon, a leading scholar of productivity, says growth is largely the result of technological leaps that can neither be predicted nor guaranteed — regardless of public policy.

Go deeper

Updated 28 mins ago - Politics & Policy

Biden calls Fox News reporter a "stupid son of a b---h" on hot mic

President Biden blasted Fox News' Peter Doocy on Monday after the reporter asked if the nation's soaring inflation is a political liability, saying, "what a stupid son of a b----h."

The latest: The president called Doocy Monday evening, the reporter told Fox's Sean Hannity. "He cleared the air and I appreciated it. We had a nice call," Doocy said when asked whether the president apologized, adding: "I don't need anyone to apologize to me."

Updated 1 hour ago - Politics & Policy

Omicron dashboard

Illustration: Shoshana Gordon/Axios

  1. Health: Fauci: "Confident" Omicron cases will peak in February.
  2. Vaccines: The shifting definition of fully vaccinated.
  3. Politics: New York Supreme Court strikes down Gov. Hochul's mask mandate for public areas — Sarah Palin tests positive for COVID, delaying defamation trial — Virginia school boards sue Gov. Youngkin for lifting mask mandate.
  4. World: U.K. to lift travel testing requirement for fully vaccinated — Beijing Olympic Committee lowers testing threshold ahead of Games.
  5. Variant tracker

Mike Pompeo shells out for media makeover

Via "Fox News Sunday"

Mike Pompeo's political action committee spent $30,000 on media training from last March to June — the most on any service beyond payroll during the first six months of 2021.

Why it matters: The former secretary of State hasn't just been losing weight but working to hone his media skills amid speculation about a possible presidential run, records show.